Should the state participate in the economy?
Key Markets report for Monday, 3 November 2025
Just as I was wrapping my three days in Istanbul last week, my friends Matt Smith and Doug Casey posted a fascinating article at Doug Casey’s Crisis Investing about their “Strange Trip to Azerbaijan.” I very much recommend the reading and their excellent newsletter, but this article in particular was very timely and related to my own visit in Azerbaijan in 2022 and the impressions I gathered through my participation at the Verona Eurasian Integrations Forums. At the time I published a brief report about it on my Substack, “A report from Eurasian Integrations conference.” The focus of discussions were the real, concrete solutions that were actually being developed and implemented in many Eurasian countries and Africa. At the time I wrote that,
“… the most important impression I got from the conference was a real sense of optimism about the future. It wasn’t explicitly stated – nobody was selling the agenda or expounding about the great expectations. But the underlying sense of optimism was quite obvious to me because it stands in such stark contrast to the pessimism that has now engulfed much of the western world. In all, Eurasian integration seems like the real deal; a genuine shift in the march of history. It should be a very hopeful change for mankind.”
Four years later, Casey’s and Smith’s article underscored just how much of a real deal these developments are. Matt Smith writes about the infrastructure development that Azerbaijan has undertaken over the last five years:
By far, the most impressive thing I saw during our visit was the level of construction occurring in the country… the scale of which is almost beyond imagination. … occasionally I could glimpse below in the valley a brand new highway system which included dozens of tunnels. Now this is probably the most difficult terrain possible to do major construction.
And yet what I glimpsed from above was shocking in scale. … along the roads that we traveled, there were endless streams of heavy equipment, hard at work, reshaping the landscape to expand the highway system we were on. There were cement factories everywhere built bespoke to support this ambitious effort.
The scale was so massive, so inorganic, and so out of place, we had a hard time making sense of it. To do something like this in America would be utterly impossible. It would cost trillions of dollars. The thinking required, too big, the manpower, unavailable, the will, long gone. … seeing this scale of construction, the costs I imagined seemed utterly impossible. And so, at my earliest opportunity, I did some research. What I found was shocking.
And what Smith shares next, truly is shocking:
Azerbaijan had built 4,000 kilometers of highway, 45 tunnels, including the second longest in the world, 447 bridges, 16 viaducts. Much of this over very, very difficult terrain. The project was mostly complete. And the total project time was less than five years. All this they’re doing for approximately $5 billion. To put that in perspective, on March 26, 2024, the Francis Scott Key Bridge in Baltimore was damaged when a container ship collided into it. As of today, the bridge stands unusable. No repair work has yet started. The estimated cost for reconstruction of that bridge is between $1.7 billion and $1.9 billion. And when will it be done? It hasn’t even started yet. The current target completion date is October 2028.
So, in four and a half years, and for about $2 billion, we get an old and important bridge replaced in one of America’s cities. And in Azerbaijan, for $5 billion, they get 447 bridges, 4,000 kilometers of highways, dozens of tunnels including the second longest tunnel in the world. All in less than five years.
Over the years, we became accustomed to hearing about the developments in China and their amazing achievements, but here we have equally impressive developments taking place in Azerbaijan. At the same time, the United States spends $250 billion on infrastructure each year with very little to show for it. Politicians have been talking about building high speed railways connecting U.S. cities for at least three decades now, but zero functional high-speed rail connections.
Of course, the problem is not in the American people but in the system. Rather than investing in infrastructure and production of goods and services that actually serve the needs of the society, colossal amounts of capital are being squandered on military hardware, ammunitions and warfare - goods destined only for destruction, to the ultimate benefit of the too-big-to-fail banking institutions and to everyone else’s detriment. I elaborated the contrast between the two alternative systems of economic governance a few weeks ago - the one that is being implemented in places like Azerbaijan, Russia and China, and the one pursued by Western economies:
As the failures of the British Free Trade system are becoming more and more obvious, they are being covered with incoherent ideological precepts while the real solutions are equally being attacked on ideological grounds. Any initiative driven by the state is being attacked as “socialism,” or “communism,” without any regards to the actual results. With time, the contrast will keep getting more obvious still.
The Jetsons future will leave the West behind
Last week I wrote about the Russian breakthrough with the Burevestnik cruise missile which has a nuclear-powered jet engine. Beyond changing the superpowers’ nuclear brinkmanship equation, this breakthrough might also change the transport and infrastructure equations. What if nuclear-powered jet engines become adapted to civilian uses in the future, powering large and small aircraft or even flying personal cars? Could this lead to the realization of The Jetsons’ vision of the future? It could, but much of the high-tech, 21st century future already exists and is being developed at this time.
Meanwhile, Western powers are obsessed with which natural gas pipelines to blow up next, what country’s regime needs to be toppled in the name of democracy and freedom and where we need to drop more bombs. In the EU, which is becoming less and less relevant by the day, virtually all policy discussions start and finish with one overarching objective: preparing for war with Russia.
Very unfortunately, preparations for war always entail destroying the economy and creating high levels of youth unemployment. Young men with jobs and good career prospects aren’t interested in going to war. First, they must be robbed of their future. Then they must be convinced that Russia is to blame. Finally, they must be recruited, trained up and armed to go to war against the enemy we tell them they must fight.
This, in a nutshell, is the tragedy of the Western world and the tragedy that awaits our children if we remain silent and passive. Ours is the choice between blind and passive acquiescence and the struggle for a better future. That struggle will have to be active, deliberate and bold.
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Today’s trading signals
With Friday’s closing prices we have the following changes for the Key Markets portfolio:
